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What is a Credit Clearance Certificate and why does it matter?

So, you had financial difficulties in the past. As a responsible consumer, you opted to make use of debt counselling. You have now reached the point that you have almost completed the debt counselling process. These are exciting times for you as your debt counselling process is nearing an end.

Your debt counsellor has advised you that you will be receiving acredit clearance certificate once all your accounts have been repaid in full. We will explain the process after you have received your clearance certificate:

What exactly is this certificate?

This certificate, also known as form19, is a vital piece of paper to prove that you have repaid all your accounts. This certificate is your evidence that you are debt-free and that you have completed the debt review process. This certificate is issued under section 71(2)(b)(i) of the National Credit Act.

A registered debt review counsellor will only issue the clearance certificate. You will receive this certificate only if:

All the restructured accounts as per court order were repaid in full
there are no outstanding Debt counselling fees
Home loan finance may get excluded. The credit clearance may get issued if there is a balance on the home loan account.

What Do I do with my credit clearance certificate?

You don't need to do much. Your debt review counsellor will act under Section 21 of the National Credit Amendment Act. This Act requires your debt review counsellor to submit a certified copy of the credit clearance certificate to all the credit bureaus. The National Credit Regulator requires your debt counsellor to present all paid up letters with your clearance certificate to all bureaus. This is to ensure that the rearranged accounts get amended by the credit bureau as paid. The Amendment Act also requires the bureaus to remove the negative months in arrears indicators from the payment profile of these accounts.

Please request your debt counsellor to submit the required documents to the credit bureau's debt review departments. These departments will attend to the necessary amendments within five business days. Your debt counsellor will notify you once the process is finalized by the bureaus.

If your debt counsellor has already done this, please submit a copy of the e-mail that got sent to the bureaus. The credit bureaus will follow up with these departments on your behalf.

If your debt counsellor is refusing to issue the clearance certificate inquire why they are refusing. If you have paid off all debts and paid up all debt counselling fees you can then lodge a formal complaint with the National Credit Regulator.

What happens after the bureaus receive my certified certificate?

After receiving your credit clearance certificate each bureau will attend to the following:

Access the NCR website. This is to confirm that the current and registered debt counsellor issued the certificate. The bureaus will not attend to your clearance certificate if your debt counsellor is not the debt counsellor on record.
Remove the Debt review indicator.
Remove paid judgments and paid defaults.
Update payment profiles of any negative month indicators. These will only be for the accounts which formed part of the debt counselling/ debt review process.

Sources - Other good reads

The Credit bureaus removed my debt review indicator. When can I apply for credit?

Each consumer's circumstances vary a lot so there is no definite answer here. We would suggest being a little bit patient and giving your credit record time to adjust over two to three months.

This will give your credit scores time to start accumulating positive points. Please visit our credit score article to learn more about credit scores.

Avoid the debt trap.

Be mindful of wanting to create more debt after getting declared debt-free. Try and remember all the stress and sleepless nights you had to endure while having too much debt.

Under debt counselling, you got accustomed to a certain lifestyle. This involved strict budgeting and you got used to only using cash to buy goods and services. This type of behavior should continue after you have received your bureau clearance and credit clearance certificate.

When buying on account always keep the following in mind:

Stick to a Strict Budget.
Don’t overspend.
Always make the required payment each month on all new facilities.
Only get credit cards when you need them. Usually for emergency use only.
Keep your monthly repayments for unsecured debts at 10% of your net income.
Keep your monthly repayments for secure debts at 20% of your net income.
Keep your monthly repayments for secured and unsecured debts at 30% of your net income.
Pay off one account facility before you take on more account facilities.
Save, save, and save some more.
Know when it is time to ask for help when you fall into trouble. Don’t hesitate to fight debt before you fall into trouble.
Never use your cards and loans as a substitute for income.

Final Thoughts.

Keep working on staying debt-free and work on keeping your finances on track. If you have any questions you wish for us to answer, request a call back message in the boxes located throughout our website. We will get an experienced debt counsellor to get back to you as soon as possible.

You can find more interesting articles in our blog section.

Look out for:

Our ultimate Credit score guide. Useful article for once you have completed the debt review process and received your credit clearance certificate.
Consumers are becoming dependent on Credit.
Is all debt bad?
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